Holland v Baker

300 HOLLAND V. BAKER 3 HAKE, 68. [68] holland v. baker. Nov. 15, 16, 1842; June 24, 28, 1843. [S. C. 12 L. J. Ch. 486; 6 Jur. 1011; 7 Jur. 620.] ; W., E. and J. mortgaged their interests under a residuary gift to B. as a security for the debt of W.; and E. and J. took a second mortgage on W.'s interest to indemnify them against the consequences of their joining in the first mortgage. Afterwards W. assigned his interest in the same property to three trustees for certain scheduled creditors. On a bill by E. and J. against B. to redeem the mortgaged property: Held, that the creditors named in the schedule were necessary parties, and were not sufficiently represented by the two surviving trustees alone. That the circumstance that the trustees were parties, not only in that character but also as being themselves creditors, did not render them sufficient representatives of the absent creditors, who were fifty-four in number; and especially, inasmuch as one of the trustees had also another and distinct mortgage on the equity of redemption. That the defect of parties was not supplied by a supplemental suit, bringing before the Court a few of the other creditors, to which supplemental bill the trustees were not parties. William, Emma and Jane Poulter were entitled in equal shares to the proceeds arising from the residue of the real and personal estates of W. Collins. William Poulter, in 1831, assigned his share of such residuary, real and personal estate to the Defendant, Baker, by way of mortgage, to secure 4000, lent to William Poulter by Baker; and Emma and Jane also joined in the mortgage and assigned their shares to Baker, for the same purpose; but it was provided that William's share should be first applied. William afterwards assigned his share of the same estate to Haines and Cole, to indemnify Emma and Jane from loss by the former assignment. William Poulter, by indenture, dated the 20th of January 1832, assigned his share and interest under the will of Collins to three trustees, of whom the Defendants, Smallpiece and Haines, were the survivors, upon trust, after payment of certain expenses and allowances, to apply the trust monies (arising from a sale of William's said share, which, by a previous deed, they were empowered to make),in satisfaction and discharge of the several debts owing to his creditors, who were parties thereto of the third part, and set opposite their respective names in the schedule thereto, or so much thereof as such monies would extend to pay; and, after such payment, in trust for William Poulter, his executors, administrators and assigns. In March 1832 another assignment was made [69] to Haines and Gates of the several shares of William, Emma and Jane, upon trusts for payment of the debt to Baker, and to satisfy certain other charges and incumbrances. In November 1838, on the occasion of the intended marriage of Jane Poulter with the Defendant, W. P. Mellersh, Emma and Jane Poulter assigned their shares in the residuary estate to the Plaintiffs, upon certain trusts for the benefit of Jane and her intended husband, and the issue of the marriage, and also for the benefit of Emma Poulter. After the marriage the Plaintiff tendered to Baker a certain sum for principal, interest and costs, and required an assignment of the mortgaged property. The bill was then filed, and prayed an account of Baker's debt, a sale of William's share and interest, and application of the proceeds towards the payment of Baker, and of the surplus to indemnify Emma and Jane in respect of the mortgage-that, upon payment of his debt, Baker might assign the shares of William, Emma and Jane, or of Emma and Jane, to the Plaintiff's, upon the trusts of the settlement; and the bill also prayed specific relief against Haines, Gates, Cole, King and Smallpiece, as arising upon the instruments and other transactions thereby stated. Nov. 15, 1842. The cause being at the hearing, on the production of the deed of the 20th of January 1832 it appeared that the creditors, parties of the third part, were fifty-seven in number, and the total amount of the sums opposite their names was 6561. Smallpiece appeared in the schedule to be a creditor for 3300, Haines. 3 HAKE, 70. HOLLAND V. BAKER 301 for 316 and Jane Poulter for 520, all of whom were Defendants. The other creditors were not parties. On behalf of some of the Defendants it was objected that the absent creditors were necessary parties. [70] Nov. 18. the vice-chancellok [Sir James Wigram]. It is not necessary for the present purpose to enter further into the circumstances of the case than relates to the share of William Poulter in the estate of Collins. William, having mortgaged his share to Baker, afterwards assigns the same property, subject to Baker's charge, to trustees, in trust for the benefit of the creditors, who should come in and execute a certain deed. Those creditors are to sign releases and give discharges, and the property is to be divided among them rateably. The deed contains several other provisions not affecting this question. It appears that many creditors came in and executed that deed. The bill is filed by the trustees of Emma, and seeks to redeem the property in respect of the interest which they may have in William Poulter's share, as an indemnity to them. To this bill they have made the trustees of the deed of January parties, but they have not made any of the creditors, in that character, parties. I do not mean to give any opinion upon the question whether it is necessary to have all those creditors parties, but I am clear that the suit cannot proceed in the present state of the record; for not only are the creditors not made parties, but no reason is suggested on the record as to number or otherwise for omitting them. I have no doubt that the Court would, in a proper case, consider a numerous body of creditors as sufficiently represented by a.limited number, even where they are sought to be charged; but certainly, in a case like the present, the bill ought to state the reason that they are not made parties to the record. minute.-To stand over, with liberty to amend the bill by adding parties, or by stating why persons proper to be parties are not made parties. [71] The bill was amended by adding the following averment:-" That the indenture of the 20th of January 1832 was duly executed by Smallpiece and Haines as creditors of William Poulter, and also by divers other persons, too numerous (being forty in number or thereabouts) to be made parties individually to this suit; and in case they were individually made parties to this suit, the same could not be effectually prosecuted." The Plaintiffs also filed their supplemental bill against four other creditors appearing in the schedule; namely, Woods, a creditor for 47 ; Stedman, 25; Moon, 11, and Clarke, 6. Smallpiece and Haines, the trustees under the deed, were not made parties to the supplemental bill. The original and supplemental causes coming on, June 24, 1843. Mr. Romilly and Mr. Bagshawe, for the Defendants, Smallpiece and Haines, the trustees under the creditors' deed, insisted that the supplemental bill, considered as a proceeding connected with the original cause, was defective, in that the trustees were not parties to it, but some of the creditors only. It was so constituted that it could not be regarded as supplying any defect in the original cause: the trustees knew nothing of the existence of the supplemental suit until it was opened at the hearing: Jones v. Jones (3 Atk. Ill), Bignall v. Atkins (6 Madd. 369), Feary v. Stephenson (1 Beav. 42), Dyson v. Morris (1 Hare, 413), Jones v. Howells (2 Hare, 342). Mr. Temple and Mr. Freeling, for the Plaintiffs, said that the original and supplemental causes were, in effect, but one suit-no new matter was introduced. The [72] trustee had had an opportunity of answering the amended bill, and might have stated anything to shew that the parties on the record did not adequately represent the scheduled creditors, but they had not made any such case on the pleadings : Greenwood v. Atkinson (5 Sim. 419). June 28. the vice-chancellor [Sir James Wigram], after stating the proceedings. It was objected on the part of the trustees at the opening of the case that they were now, for the first time, aware of the existence of the supplemental bill, and they were instructed to state that there was reason for believing that the creditors brought before the Court by that bill had not been properly selected, so as 3Q2 HOLLAND V. BAKER 3 HARE, 73. to represent the body of creditors. I should pay no attention to the suggestion, except for the purpose of shewing what course the Court ought to take when it sees that such a case may possibly exist, but has not the means of knowing the truth. The question is whether the trustees are necessary parties to the supplemental bill. For the purpose of trying that question, I entirely exclude from my consideration the fact that the trustees, who were parties to the original bill, were also creditors. I suppose it to be a case in which the trustees were in that character parties to the original bill, and that a supplemental bill has since been filed against a few of the creditors without the trustees. Now, primd facie, I take it to be the duty of trustees, being parties to a bill affecting the trust property, to insist that the cestui que trusts should be brought before the Court. Trustees are not themselves owners of the property; they are, in a sense, agents for the owners in executing the trusts, but they are not constituted agents for the purpose of defending the owners against the adverse [73] claims of third parties in this Court. It is the duty of trustees in such a situation to object that the owners of the estate are not before the Court; and I think it is the right of trustees in that case to...